December 27, 2010

The NWO is considered by many people to be a conspiracy theory, but it is well under way and being accomplished through world leaders at UN conferences. I didn't believe it either until I read parts of UN Agenda 21, which was signed by George H.W. Bush in Rio in 1992. Ever since, our legislators have been more interested in working from a global standpoint rather than the prosperity of the US. Its so obvious yet it seems to be a subject forbidden to the media. I read somewhere that all government officials have to take an oath to work within the UN Agenda agreement. That would include elected and appointed officials. I would go so far to say that nobody will become president without taking this oath. I was surprised to see that Walter Cronkite received an award from the World Federation for his efforts toward a one world government. Hillary Clinton congratulated him at the ceremony. This has been going on for years, and they get closer all the time by creating more and more interdependence among nations. So it would not be any kind of surprise if Gates was a one worlder. Obama definitely. - BekindtoAnimals22, Is Bill Gates a New World Order fanatic?, September 2010

As I sit down to work on my third annual letter, governments in every corner of the world are facing tough decisions about how to reduce spending. Although foreign aid accounts for less than 1 percent of governments’ total budgets, it is one place being considered for cuts. As a result, health and agricultural assistance that saves lives and puts poor countries on a track for self-sufficiency is at risk.

The world’s poorest will not be visiting government leaders to make their case, unlike other constituencies, so I want to help make their case by describing the progress and the potential I see in key areas of health and development. Perhaps it is ironic for someone who has been so lucky to talk about the needs of those who have not.

I believe it is in the rich world’s enlightened self-interest to continue investing in foreign aid. If societies can’t provide for people’s basic health, if they can’t feed and educate people, then their populations and problems will grow and the world will be a less stable place.

Whether you believe it a moral imperative or in the rich world’s enlightened self-interest, securing the conditions that will lead to a healthy, prosperous future for everyone is a goal I believe we all share.

Many people don’t have a clear image of the benefits aid actually provides. That’s not surprising, because aid covers many different areas. Also, in the past some aid was sent to countries to buy friendship without real regard for its impact. However, today a significant portion of foreign aid is spent on hugely beneficial programs that improve people’s lives in both the near and long term.

Despite the threat to aid budgets, one thing that makes me optimistic about the future is the courage of leaders who are finding ways to make the welfare of poor people a priority. Under David Cameron’s leadership, the United Kingdom set a great example by keeping its promise to grow aid spending despite the cuts it had to make. It is inspiring to see a leader stand up for what he believes is right, even when it isn’t easy.

Aid for the poorest has already achieved a lot. For example, because of donors’ generosity, we are on the threshold of ending polio once and for all.

Ending Polio

Polio is a terrible disease that kills many and paralyzes others. Fifty years ago it was widespread around the world. When you talk to people who remember polio in the United States, they’ll tell you about the fear and panic during an outbreak and describe grim hospital wards full of children in iron lungs that maintained their breathing. At its peak in the United States in 1952, polio paralyzed or killed more than 24,000 people.

As a result of mass mobilizations to administer the polio vaccine, polio was eliminated in the United States and most developed nations decades ago. Most people who live in rich countries assume the disease is long gone and that it doesn’t kill or paralyze children anymore. But it is still a frightening presence in a number of places around the world.

In 1988 the global community adopted the goal of ending polio altogether. At that time more than 350,000 children a year worldwide were killed or paralyzed by the disease. Since then, vaccination coverage has increased significantly and the number of cases has gone down by 99 percent, to fewer than 1,500 last year. There are now just four countries where polio transmission has never been stopped: India, Nigeria, Pakistan, and Afghanistan.

That’s incredible progress, but the last 1 percent remains a true danger. Eradication is not guaranteed.It requires campaigns to give polio vaccine to all children under 5 in poor countries, at a cost of almost $1 billion per year.We have to be aggressive about continuing these campaigns until we succeed in eradicating that last 1 percent.

Therefore, funding is critical to success. Organizations such as Rotary International www.rotary.organd the governments of India, the United States, the United Kingdom, and Japan are all major contributors to the polio campaign. Our foundation gives about $200 million each year. But the campaign still faces a 2011-12 funding gap of $720 million. If eradication fails because of a lack of generosity on the part of donor countries it would be tragic. We are so close, but we have to finish the last leg of the journey. We need to bring the cases down to zero, maintain careful surveillance to ensure the virus is truly gone, and keep defenses up with polio vaccines until we’ve confirmed success.

Benefits of Eradication

Why is it so important to end polio? Eradication will have three huge benefits.

The first is that getting rid of polio will mean that no child will die or be paralyzed by the disease in the future. One thing most people don’t realize is that if we don’t finish the job on eradication, we will lose a lot of the ground we’ve gained over the past two decades. The disease will not stay at its current low level. If we don’t get rid of it, it will spread back into countries where it’s been eliminated, and it will kill and paralyze children who used to be safe. Only eradication will guarantee that all children are safe.

The second benefit is that the money that will be saved by eradicating polio far exceeds what we are spending on eradication efforts now. The long-term benefits of the last couple of billion dollars spent on eradication will be truly phenomenal. A recent estimate added up the cost of treatment that won’t be necessary and the enhanced economic contribution of adults who won’t get polio. Eradication could save the world up to $50 billion over the next 25 years.

The third benefit is that success will energize the field of global health by showing that investments in health lead to amazing victories. The eradication effort illustrates so well how a major advance in the human condition requires resolve and courageous leadership. To win these big important fights, partnerships, money, science, politics, and delivery in developing countries have to come together on a global scale.

The history of polio and polio eradication is fascinating. (One of the best books I’ve read on the subject is David Oshinsky’s Polio: An American Story.) Polio was the first disease that raised significant money from the broad public. The March of Dimes was created to combat the disease. Although President Roosevelt and lots of Hollywood stars helped the campaign, its huge success came from neighborhood-based fundraising. I remember March of Dimes volunteers ringing our doorbell when I was growing up and asking for a donation. By any measure, the public’s generosity in supporting that charity made it one of the most successful health-related fundraising campaigns ever.

The March of Dimes funded research into the first polio vaccine, which was invented by Dr. Jonas Salk and introduced in 1955. It was such an important priority to get the polio vaccine out widely that the U.S. government sponsored the campaign, which it had never done before. The campaigns of the late-1950s were wildly successful, and by 1961 the number of cases in the United States was down to just 161.

A second polio vaccine—this one in the form of liquid drops that children swallow instead of an injection in the arm—was invented by Dr. Albert Sabin and licensed in 1963. By 1979 there was no more poliovirus in circulation in the United States. Dr. Salk’s and Dr. Sabin’s vaccines are still the key tools used for eradication today.

To this day, the smallpox campaign is the only successful human disease eradication campaign in history. At its peak, smallpox killed over 2 million people every year and also blinded and disabled large numbers. The eradication campaign started in 1967, the last naturally acquired case of smallpox was in 1977, and the world was certified as being free of smallpox in 1979. (Two excellent books on the smallpox eradication are Dr. D.A. Henderson’s Smallpox: The Death of a Disease and the forthcoming House on Fire by another key smallpox warrior, Dr. Bill Foege.)

Smallpox had a number of characteristics that made it easier to eradicate than polio. Almost everyone who got smallpox developed a distinct rash. In contrast most polio infections are not noticed because less than one in 100 people infected are paralyzed, even though all those infected can transmit the virus. This means by the time a paralytic case is found, the poliovirus has probably spread.

Also, the vaccines against polio are not as effective as the smallpox vaccine, which was so powerful that a single vaccination protected almost everyone. In the case of the most common polio vaccine, at least three doses are required to get 85 percent of children fully protected. In many countries of the developing world, even more doses are needed to reach the immunity levels needed to stop transmission of the virus.

But the polio campaign also has some huge advantages that the smallpox campaign did not have. The advanced science we have today lets us sequence the DNA of the polio virus and develop an understanding of the history of transmission, which guides our work. We also have far better communications and modeling tools than were available in the 1970s, and those are being used in smart ways to respond rapidly to every outbreak.

In 2003 I would have said we were just a couple of years away from ending polio, and I would have been wrong. That year there were false rumors in Nigeria that the polio vaccine caused women to become sterile. This allowed the disease to have a resurgence and to spread to many other countries. The experience of 2003 serves as a reminder to be humble as we move forward. But humility does not mean fatalism.

Fortunately those false rumors have been almost completely eliminated through the leadership of key political and religious figures. In 2009 when I visited Northern Nigeria to meet with the most important traditional leader, the Sultan of Sokoto, he committed to the campaign. It was fantastic to see him publicly giving his support. (He also gave me a horse to thank me but I told him I couldn’t take it.)

Last year both India and Nigeria had substantially fewer cases than ever before. In India the number of cases went down from 741 in 2009 to just 41 in 2010. In Nigeria, thanks in large part to the renewed leadership in the northern part of the country, the number went down from 388 to just 18. But alongside the phenomenal progress was another reminder that gains can be lost without sustained action.

The majority of cases in 2010 were in countries that had been polio-free until the virus travelled back across borders and caused outbreaks in areas where people had gotten lax about vaccination. There was a large outbreak in Tajikistan in the first half of 2010 and another in Congo in the second half. In both regions there were a number of immunization campaigns organized as a response. Today the outbreaks appear to be under control.

What those outbreaks in formerly polio-free countries prove is that eradication is a global project requiring every country to do its part. Very few projects demand global participation. In most areas each country can pursue its own approach, and countries can compare outcomes to see which approach is the most successful.

Philosopher and historian Will Durant once observed that the only thing that could get countries to join forces would be an alien invasion. To my mind, terrible diseases are surrogates for an alien invasion. If we are to succeed, the world needs leadership from a global institution and significant, coordinated resources from rich countries to fund activities in the poorest countries.

For polio, the World Health Organization (WHO) has played the central role with Rotary International, the Centers for Disease Control, and UNICEF as key partners. Polio eradication has benefited immensely from having Rotary’s support. Rotary had the vision to get involved in 1985 and has kept polio eradication as its top priority. Everywhere I go to learn about polio, I see Rotary members helping out with the hard work.

I feel sure that with continued support we will be able to show significant progress building on this year’s work. The site www.polioeradication.org tracks the key parts of the campaign including fundraising and the latest cases. I will make a number of trips focused on polio this year, including additional trips to India and Nigeria, and will write a report for the foundation website. For anyone who wants to support the polio campaign, which would be fantastic, visit www.rotary.org and click on the EndPolioNow logo.

Miracle of Vaccines

In the same way that during my Microsoft career I talked about the magic of software, I now spend my time talking about the magic of vaccines. Vaccines have taken us to the threshold of eradicating polio. They are the most effective and cost-effective health tool ever invented. I like to say vaccines are a miracle. Just a few doses of vaccine can protect a child from debilitating and deadly diseases for a lifetime. And most vaccines are extremely inexpensive. For example, the polio vaccine costs 13 cents a dose.

This year 1.4 million children will die from diseases for which there are already vaccines—diseases like measles, pneumonia, and tetanus. Those lives can be saved if we can reduce the costs of vaccines and raise enough money to buy and distribute them. If we simply scale up existing vaccines in the five countries with the highest number of child deaths, we could save 3 million lives (and more than $2.9 billion in treatment costs alone) over the next decade.

In addition, researchers are inventing new vaccines for malaria, AIDS, and tuberculosis, and these would save millions more lives. But generous aid is required to realize the true lifesaving potential of vaccines. The most direct way of saying this is that every $2,000 cut in the most effective aid spending causes a child to die.

A few years ago I was looking into the history of vaccination coverage. In 1980 less than 20 percent of children worldwide received the vaccinations for diseases including measles, diphtheria, tetanus, and whooping cough (pertussis) that children in rich countries were receiving. Less than 15 years later, in 1995, vaccination rates had been raised to over 70 percent. Just this year I finally got around to learning why there was such a huge increase. The head of UNICEF at the time, Jim Grant, led the way. The book Jim Grant–UNICEF Visionary tells his amazing story. Since there are only a few used copies of this in circulation UNICEF recently made a free version available at www.unicef.org/publications/index_4402.html.

I’m surprised by how little attention his story gets and how long it took me to find out about it. I was inspired by reading how he drove global progress even during the tough economic decade of the 1980s. We can draw lessons from his leadership now, in our own tough economic times.

As is often the case with courageous efforts, many people resisted Jim Grant’s push, viewing it as too top-down. However, he managed to enlist a number of countries to lead the way, and as the number of deaths in those countries dropped dramatically he was able to persuade almost every country to run strong vaccination campaigns. It is especially amazing that he did this in an age when there was no Internet and no email. Jim Grant’s achievement is the greatest miracle of saving children’s lives ever.

The benefits of widespread vaccination are mostly explained in terms of the lives vaccines save, and based on that measure alone, vaccines are the best investment to improve the human condition. However, there are two other equally important benefits that are not as widely known partly because they are harder to quantify.

The first is the reduction in sickness. I don’t mean just the acute sickness where a child is clearly suffering from the disease, but also the permanent disabilities caused by the disease. This is most noticeable when the disability presents with a clear symptom such as being paralyzed by polio or going deaf because of a pneumococcal infection. However, the largest disability is the effect on mental development. For example, severe cerebral malaria damages your brain even if you survive. When children have lots of diarrheal episodes or parasites in their intestines, they don’t get enough nutrition for their brains to develop fully.

The huge infectious disease burden in poor countries means that a substantial part of their human potential is lost by the time children are 5 years old. A group of researchers at the University of New Mexico conducted a study, covered in The Economist, showing the correlation between lower IQ and a high level of disease in a country. Although an IQ test is not a perfect measure, the dramatic effect you see is a huge injustice. It helps explain why countries with high disease burdens have a hard time developing their economies as easily as countries with less disease.

The second great benefit of vaccination is that as the childhood death rate is reduced, within 10 to 20 years this reduction is strongly associated with families choosing to have fewer children. While it might seem logical that saving children’s lives will cause overpopulation, the opposite is true.

I mention this amazing connection often, since I remember how I had to hear it multiple times before the full implications of it became clear. It is the reason why childhood health issues are key to so many other issues, including having resources for education, providing enough jobs, and not destroying the environment. Only when Melinda and I understood this connection did we make the full commitment to health issues, especially vaccination.

The connection of health to education, jobs, and the environment points back to the tremendous value of high-quality international aid—and why it’s essential that donor nations not cut their spending on it. Melinda and I have committed $10 billion from the foundation over the next 10 years to help make this the Decade of Vaccines. However, this will fall well short of what is needed.

The group which helps poor countries purchase vaccines and increase vaccine coverage is the GAVI Alliance and like the polio campaign its success will depend on donor generosity.

The foundation’s website does a great job of outlining all of our strategies, but in the remainder of my letter I want to highlight a few specific areas. The world has made some crucial breakthroughs, and with bold leadership I think we can do even more.

Malaria

The fight against malaria is making very good progress. The death toll, overwhelmingly of young children in Africa, went down from 985,000 in 2000 to 781,000 in 2009. Of the 99 countries with malaria, 43 have decreased cases of the disease by more than 50 percent. Turkmenistan and Morocco were recently declared malaria-free. For these communities the reduction in both death and sickness makes a huge difference. And it is possible only because of increased donor spending, which reached $1.5 billion in 2009.

The Roll Back Malaria group, with strong support from the WHO and our foundation, has set an aggressive goal to provide bed nets to almost every household that needs them in the next few years. As coverage goes up from its current level of 42 percent, it will have a dramatic impact. In Senegal, where 80 percent of households own a bed net, the number of malaria cases went down 41 percent in a single year. Many amazing grassroots groups are helping with the delivery of bed nets. The Nothing But Nets campaign, for example, has gotten hundreds of thousands of individual citizens and organizations like the United Methodist Church and the National Basketball Association involved in the fight against malaria.

We are also working on lowering the cost of the anti-malaria drugs containing artemisinin, which are expensive enough that people are still using less effective drugs instead. The approaches range from breeding the plant that provides artemisinin to have a higher yield, to using very advanced synthetic chemistry that can make artemisinin starting with simple sugars.

As is the case with all infectious diseases, the ultimate tool against malaria would be a low cost, highly effective vaccine. The RTS,S vaccine, developed in partnership with the pharmaceutical manufacturer GSK, is in its final phase-3 trial stage. Interim data will be available later this year, and we should have final results by 2015. A number of other vaccine candidates that might be even more effective or might be combined with RTS,S are also making progress, and several will start human trials this year.

Saving the Youngest Children

Of the 8.1 million deaths per year of children under the age of 5, over 40 percent happen in the first 28 days of life, or the neonatal period. The good news is that we are headed in the right direction. In 1995 there were an estimated 5.6 million neonatal deaths. The most recent estimates show the number down to around 3.6 million.

Unlike the deaths that take place after a child is 28 days old, almost all of which can be prevented by inventing and delivering vaccines, reducing these early deaths requires a range of approaches. Some require new tools such as an ointment for the baby’s skin that prevents infection and an antibiotic solution for cleaning the cut umbilical cord. However, many of the key interventions involve social and behavioral change. You can have a huge impact (on both newborn and maternal health) by increasing the number of births done by a skilled provider in a clinic. It’s also important to teach mothers to wash their hands before handling a baby, to have frequent skin-to-skin contact with their babies, and to breastfeed exclusively for the baby’s first six months. (Mother’s milk contains not only key nutrition but also antibodies that block infection until the baby’s immune system is ready to operate on its own.) Where all of these elements come together, neonatal deaths can be reduced by 50 percent or more, so it’s critical that we learn more about how to teach and motivate mothers effectively, especially at a large scale.

Melinda has been a strong leader on maternal and child health issues. She gave an especially powerful speech last year to the Women Deliver conference (www.gatesfoundation.org/womendeliver). The plight of mothers and their babies is something she feels deeply, and it’s something we talk about a lot.

When she came home from a trip to Malawi she shared the experience of seeing two babies in a hospital in the town of Lilongwe, lying side-by-side in the same incubator. They were born within hours of each other. Each had suffered the same condition–they were unable to breathe at birth. Sadly, it was clear that only one would survive. That baby’s mother had made it to the donor-funded hospital in time for her delivery and was able to get the care she needed. Her baby was immediately resuscitated, which saved his life. The other was not so fortunate. He was born on the way to the clinic, on the side of road, and was not resuscitated soon enough. I wish everyone had a chance to experience what Melinda did, so they could see how things are improving but also understand the urgent need to do more.

HIV/AIDS and the Need for Leadership

Progress continues in fighting the AIDS epidemic, but the pace is slow. The rate of HIV infection has been reduced by almost 20 percent over the last 10 years, to fewer than 2.7 million infections per year. The number of people dying from AIDS has gone down by more than 20 percent in the last five years, to fewer than 2 million annually. Given all the lives that are at stake, I am impatient enough about this that I am willing to be viewed as a troublemaker by people who are happy with the status quo.

The war against AIDS is being waged on two fronts—treating those who are already infected and preventing new infections. Treatment continues to be scaled up, with more than 5 million people receiving HIV drugs. This is a great success story. Rich country generosity has been crucial and the execution in poor countries has been strong. However, there will not be enough money to treat everyone who will become infected if we don’t halt the progress of HIV. Because we don’t have a cure for AIDS, treatment has to continue for a patient’s entire life. That means costs continue to increase as you put more and more people on treatment.

Even without including people who will become infected in the future, the cost of treating the 33 million people living with AIDS today would be over $40 billion per year at current costs—over four times as much as is provided in aid today. To minimize the funding gap we need to reduce per patient costs of treatment. Drug costs have already been reduced to less than 20 percent of treatment costs. Most of the future savings will have to come from treatment models that reduce personnel, laboratory, and overhead costs. The difficulty of funding treatment makes it clear how important it is to prevent new cases. The sooner we make progress the better. There needs to be a sense of urgency that doesn’t exist yet.

Prevention breaks down into several different areas. The easiest should be preventing mother-to-child transmission since it simply involves giving a mother drugs to prevent transmission to her child. There is a lot of focus on getting from the current number of over 300,000 infections per year to zero. Another prevention approach is counseling people to change their behavior, including avoiding risky acts and using condoms.

Then we have prevention approaches that rely on new tools. We now have three tools that have shown significant impact. The first is male circumcision, which I discussed last year. Amazingly, teenagers in communities with high HIV incidence show a high willingness to be circumcised. Kenya is leading the way with over 200,000 circumcisions performed. However, there are over 10 million men in high-risk settings in Africa who would benefit from male circumcision, and we should be scaling up 10 times faster than we are.

Another new tool is a vaginal microbicide gel that a woman can use to protect herself. A recent trial showed a gel containing tenofovir protected women against infection. Now the question is how long it will take before the gel is rolled out on a large scale. As someone outside the field, I am surprised at the number of steps it takes. First the product has to be licensed, which requires approvals from regulatory groups in both the country where the product will be used and donor countries. Many of these approval steps happen serially rather than in parallel, and it is only when the entire approval process is complete that the product can be rolled out. Even then the process isn’t complete because a whole system for delivering the product needs to be put together, and again a lot of these steps proceed in a slow serial fashion.

Another new prevention tool, PrEP (Pre-Exposure Prophylaxis), involves someone without HIV taking an anti-HIV drug on a regular basis to block infection. A PrEP trial showed a strong prevention benefit for the participants who consistently used the drugs and a weaker impact when all the participants were included. With both microbicides and PrEP I think countries with large epidemics should figure out how to do large community trials as soon as possible. This would shorten the time before all patients have these lifesaving tools by many years.

If the United States had an epidemic where almost half the girls in large neighborhoods contracted a terrible disease, we would find a way to cut through all the complexity. With HIV it is more difficult since there are many countries involved. But we need to work creatively to shorten these delays.

The best tool would be a vaccine for HIV. The scientific progress on this has gone well. The positive results of the trial in Thailand were a turning point for the field, and blood samples from the volunteers are being studied in depth for lessons about why that vaccine worked but only to a limited degree.

There has also been an explosion in the discovery of antibodies that block HIV infection. Scientists don't yet know how to make a vaccine that will cause patients to generate lots of these antibodies, but there are several approaches that look promising and will be ready to go to trials in the next few years.

In order to get a fully effective HIV vaccine we will almost certainly need several rounds of trials where we learn and improve the candidate vaccines. So to get a vaccine as soon as possible we need to minimize the length of the trials and the time between trials. So far each cycle has taken over five years. The field needs to look into how to shorten this so that progress matches the urgency of the problem.

Agriculture’s Great Promise

Outside of health the area where we invest the most to help poor people is agriculture. There is so much potential in agricultural development because most poor people in the world feed their families and earn their income from farming. When farmers increase their productivity, nutrition is improved and hunger and poverty are reduced. In countries like Rwanda, Ethiopia, and Tanzania, investments in seeds, training, access to markets, and innovative agricultural policy are making a real difference. Ghana made agriculture a priority and cut hunger by 75 percent between 1990 and 2004. The increase in food production has led to economic development in other areas.

But the growth in other countries has been slower. These are complex issues, and it’s going to take strong leadership to make sure farmers have the opportunity to seize their potential. Kofi Annan, who chairs the Alliance for a Green Revolution in Africa, is leading the way by helping to drive a new agriculture agenda for the continent.

One program I’m especially enthusiastic about is a partnership launched in 2008 with the World Food Programme (WFP), the world’s largest humanitarian agency for fighting hunger. What I like about it is that it takes a new approach to something the world has been doing for a long time, food aid.

In the past most small farmers were not able to sell their produce to WFP to be used as food aid. They had trouble meeting WFP’s complicated requirements and delivering food in bulk quantities that met WFP’s quality standards. Our partnership works with farmers and others to resolve these issues, making it possible for them to sell to lots of additional buyers including WFP. When the West African country of Niger experienced a famine last summer, WFP bought 1,000 metric tons of rice from a farmers’ organization in Mali. When small farmers in Mali are earning extra income by feeding hungry families in Niger, it’s a clear win-win.

The near-term rise in food prices and the long-term increased demand for food will create opportunities for small farmers even in the poorest countries. In fact, increasing production in Africa will be critical for the world to have enough food. It’s encouraging that foreign aid for agriculture has now increased from its historic low of just $2.8 billion in 2003 to $5.9 billion in 2009, and it’s critical that nations don’t cut back again.

One of the most important new developments came in April when I joined the finance ministers of the United States, Spain, Canada, and South Korea to launch the Global Agriculture and Food Security Program with initial commitments of nearly $1 billion over three years. This program provides support to developing countries with strong domestic agricultural development plans that they are already investing in themselves but cannot fully fund. It has generated amazing demand, demonstrating how committed poor nations are to their own agricultural development.

Excellence in Teaching

In the United States, the foundation’s biggest investments are in education. Only a third of students are graduating from high school prepared to succeed at college-level work, and even fewer are going on to get a degree that will help them compete for a good job. No one should feel comfortable with those results.

Davis Guggenheim's amazing and popular movie “Waiting for Superman” made a powerful argument against the status quo. It showed a broad audience that schools with the right approach can succeed, even with inner city students that typical schools do not educate well. As more people understand the gap between what is possible and what is actually happening in most schools, I believe the momentum for reform will grow.

Since 1980 U.S. government spending per K-12 student increased by 73 percent, which is 20 percent faster than the rest of the economy.Over that time our achievement levels were basically flat, while other countries caught up. A recent analysis by the Programme for International Student Assessment (PISA) showed the United States is about average (compared to 35 developed countries) in science and reading and below average in math. Many Americans have a hard time believing this data, since we are so used to being the global leader in educational achievement and since we spend a lot more money on education than many other countries.

PISA measured educational achievement in the Shanghai area of China, and even allowing for the fact that Shanghai is one of the most advanced parts of China, the scores relative to the United States and other countries were quite stunning. China did better in math, science, and reading than any of the 65 countries it was compared to, and it achieved these results with an average class size of more than 35 students. One of the impressive things about the Chinese system is how teachers are measured according to their ability. There are four levels of proficiency in the Chinese system, and to move up a level, teachers have to demonstrate their excellence in front of a panel of reviewers.

According to the PISA analysis (available at www.pisa.oecd.org), two key things differentiate the U.S. education system from most other countries’ systems. The first is that non-U.S. students are in school for more hours, and the second is that U.S. school systems do very little to measure, invest in, and reward teacher excellence.

Most people who become teachers do so because they’re passionate about kids. It’s astonishing what great teachers can do for their students. But the remarkable thing about great teachers today is that in most cases nobody taught them how to be great. They figured it out on their own. That’s why our foundation is investing to help devise measurement and support systems to help good teachers become great teachers.

Our project to learn what the best teachers do—and how to share this information with other teachers—is making significant progress. With the help of local union affiliates, we have learned a lot already. We’re learning that listening to students can be an important element in the feedback system. In classes where students agree that “Our class stays busy and doesn't waste time” or that “In this class, we learn a lot almost every day,” there tend to be bigger achievement gains.

Another great tool is taking a video showing both the teacher and the students and asking evaluators to provide feedback. Melinda and I spent several days visiting schools in Tennessee this fall and sat with teachers who were watching videos of themselves teaching. We heard from a number of them how they had already improved by seeing when students were losing interest and analyzing the reasons.

Ultimately, the goal is to gather high-quality feedback from multiple sources—test scores, student surveys, videos, principals, and fellow teachers—so that teachers know how to improve. I think it is clear that a system can be designed that teachers agree is fair, has modest overhead, and rewards the teachers who are doing the most for their students.

State budgets, the biggest part of K-12 funding, will be challenged in the years ahead because of the economic downturn, the liabilities from early retirement and pension commitments, and increasing medical costs. I recently gave a speech to the chief state school officers (www.gatesfoundation.org/ccsso) about how they might need to find money to reward excellent teaching by shifting some away from things like payment for seniority or advanced degrees that do not correlate with improved teaching.

I am very enthusiastic about the potential of innovation to help solve many of the problems with our education system. Melinda and I were impressed when we visited the Tennessee Technology Center in Nashville, an institution that provides young adults with technical training and certificates. It gets significantly better results than its peer institutions—graduating 71 percent of its students—because it focuses on teaching job skills that are in high demand and is oriented around meeting the needs of students who are juggling school with work and family. Sometimes something as simple as rethinking the times when classes are scheduled makes a huge difference for students.

The foundation is funding the development of online tools to help both K-12 and college students learn. Pioneers like Sal Khan are already showing how effective online tools can be. His website www.khanacademy.org continues to grow its library of 2,000 short instructional videos on topics from basic arithmetic to complicated subjects like biology and physics. The videos are a tremendous resource for students of any age.

Sal’s vision for how technology can improve learning is broader than just videos. With support from the foundation, he’s been able to expand his site to include online exercises that diagnose weak spots, pointing you to additional material to fill the gaps in your knowledge. Also, Khan Academy is creating on online “dashboard” to help teachers use the site as part of their curriculum. The dashboard tells the teacher how each student is doing, pinpoints where they’re having trouble, and suggests explanations and exercises to help.

Although it is clear that online learning works for strongly motivated students, we need to learn how to blend classroom learning and online learning, particularly for younger and less-prepared students. As these projects develop and we start to answer many of these questions, I believe technology will let us dramatically improve education despite the budget constraints.

The Giving Pledge

Warren Buffett is a remarkable friend and mentor to both Melinda and me, and we have learned so much from spending time with him and working with him on foundation projects. A few years ago Warren suggested that he, Melinda, and I should get together with some of the most generous givers in the country and see what we could learn from them. We started out by having dinners where everyone talked about why they give, what they are passionate about, and what they wish they could do better. The dinners evolved into discussions of the challenges of giving effectively. It became clear that there was a lot of collective knowledge and that we could inspire each other and in some cases work together. There was a strong sense we should broaden the discussion to a larger group including people who were earlier in their giving career.

This led to the idea of the Giving Pledge. It is simply a commitment to give the majority of your wealth away during your lifetime or through your will. We hope that over the long term it will encourage people to start earlier, collaborate more, and make their giving even more impactful.

We are excited that 58 people have already joined the Giving Pledge. You can see the letters describing their thinking about giving at www.givingpledge.org. The United States is the most generous country in the world. More than 15 percent of the large estates go to charity. That is significant, but there is room for that to increase. Warren has said,

“We want the general level of giving to step up. We want the Pledge to help society become even more generous. We hope the norm will change towards even greater and smarter philanthropy.”

Although this effort is focused on those people in the United States with the greatest wealth, we are encouraged by and support similar efforts that focus on other groups. For example, some of the top business people in China and India asked if we would meet with them to stimulate discussion about giving in their country. Warren and I had the meeting in China in November and we were very happy with how many people came and how the conversation turned out. All three of us will be attending a similar meeting in India in the first half of the year.

Continuing the Conversation

Last year I launched www.gatesnotes.com and started a Twitter feed (@BillGates) to share my thoughts on the work we’re doing and what I’m learning from leaders and innovators. One great benefit of these tools is that they allow me to hear back from people. Over the next year I’ll be trying some new ways of adding interactivity to the site so I can get even more feedback.

Melinda is also very interested in spurring a broader conversation about the issues she’s focused on at the foundation. Last year she started posting regularly to the foundation’s blog. She also hosted a terrific TEDx event (www.tedxchange.org/pastevents) in New York that brought together interesting speakers on global health and development. Next year, building on her relationship with TED, she’ll be hosting a series of “TEDxChange” events in communities around the world—in places like Kenya and India. The goal of these TEDxChange events is to give people a chance to hear about health and development from people who live in the places where the work is happening.

Despite government budget difficulties and the complexity of solving the key problems the foundation’s work addresses, Melinda and I remain optimistic. We meet so many remarkable leaders whose work is making the world a better place.

My father, our co-chair, set the foundation’s direction from the start and he always helps us keep in mind what is important. Jeff Raikes, our CEO, continues to add great people and improve the way we do our work. Not everyone can go to the field, or even donate. But every one of us can be an advocate for people whose voices are often not heard. I encourage everyone to get involved in working for solutions to the challenges those people face. It will draw you in for life.

...If we project what the world will be like 10 years from now without innovation in health, education, energy, or food, the picture is quite bleak. Health costs for the rich will escalate, forcing tough trade-offs and keeping the poor stuck in the bad situation they are in today. In the United States, rising education costs will mean that fewer people will be able to get a great college education and the public K–12 system will still be doing a poor job for the underprivileged. We will have to increase the price of energy to reduce consumption, and the poor will suffer from both this higher cost and the effects of climate change. In food we will have big shortages because we won’t have enough land to feed the world’s growing population and support its richer diet.

However, I am optimistic that innovations will allow us to avoid these bleak outcomes.

In the United States, advances in online learning and new ways to help teachers improve will make a great education more accessible than ever.

With vaccines, drugs, and other improvements, health in poor countries will continue to get better, and people will choose to have smaller families.

With better seeds, training, and access to markets, farmers in poor countries will be able to grow more food.

The world will find clean ways to produce electricity at a lower cost, and more people will lift themselves out of poverty.

Although innovation is unpredictable, there is a lot that governments, private companies, and foundations can do to accelerate it.Rich governments need to spend more on research and development, for instance, and we need better measurement systems in health and education to determine what works.

Melinda and I see our foundation’s key role as investing in innovations that would not otherwise be funded. This draws not only on our backgrounds in technology but also on the foundation’s size and ability to take a long-term view and take large risks on new approaches. Warren Buffett put it well in 2006 when he told us,

“Don’t just go for safe projects. You can bat a thousand in this game if you want to by doing nothing important. Or you’ll bat something less than that if you take on the really tough problems.”

We have a framework for deciding which innovations we get behind. A key criterion for us is that once the innovation is proven, the cost of maintaining it needs to be much lower than the benefit, so that individuals or governments will want to keep it going when we are no longer involved. Many things we could fund don’t meet this requirement, so we stay away from them. Another consideration for us is the ability to find partners with excellent teams of people who will benefit from significant resources over a period of 5 to 15 years.

Inventing New Tools and Changing Social Practices

Our framework involves funding a range of ideas with different levels of risk that they could fail. The ones with low risk are where the innovation has been proven at a small scale and the challenge is to scale up the delivery. High-risk innovations require the invention of new tools. Some are at the frontiers of science, such as finding a new drug and running a large trial to see how well it works. Other high-risk efforts involve changing social practices, such as persuading men at risk of getting HIV to get circumcised.

Measuring Effectiveness

It is critical that we understand in advance what might prevent an innovation from succeeding at scale. For work in developing countries, the lack of skilled workers or electricity might be a key constraint. For work with teachers, we need an approach to measuring their effectiveness that they will welcome as a chance to improve rather than reject because they think it’s more overhead or fear that it might be capricious. Even with the best efforts to make sure we understand the challenges, we need intermediate milestones so we can look at what we have learned about the technology or the delivery constraints and either adjust the design or decide that the project should end. We are focused on strong measurement systems and sharing our results where we have successes but also where we have failures. Innovation proceeds more rapidly when different parties can build on each other’s work and avoid going down the same dead end that others have gone down.

Vaccinesand Genetically Modified Seeds

To provide some examples, in the chart below, I show nine innovations we are investing in, broken into sections for each of the foundation’s three divisions. Overall we have about 30 innovations we are backing.

Although the list below includes only one new vaccine and one new seed, we are funding vaccines for several diseases (malaria, AIDS, tuberculosis, etc.) and new seeds for many crops (corn, rice, wheat, sorghum, etc.). For each innovation I show the time frame, beneficiaries, and constraints. A few things we do, like disaster relief and scholarships, do not fit this model, but over 90 percent of our work does.

The improved health of children in poor countries is a great example of the power of innovation. In 2008, for the first time fewer than 9 million children under age 5 died. In 2005, the last time the number was measured carefully, it was just below 10 million. This is huge progress, and it is due to improvements like increased vaccinations and better malaria treatment and prevention.

... Over the past four years we funded several pilot projects [on neonatal and childhood deaths] and built a strong team to lead this work. The pilots showed that the right integrated approach made a huge difference. It involved educating the mothers and the birth attendants as well as giving them some new tools such as easy-to-use antibiotics. Based on some of the early success we’re seeing, we are now increasing our investment to see if we can scale up these approaches.

Melinda has a particular interest in this area and has several trips planned for 2010 to see these projects. Our working partnership makes it very comfortable for one of us to focus more intently on a particular area but always share what is being learned so we can work together in figuring out how it should fit into the overall strategy. I’ve always had a strong partner in the work I have done. In the early days of Microsoft it was Paul Allen, and in the later days it was Steve Ballmer. Although some people don’t need this kind of partnership, I have found that only when I have a partner who knows my strengths and weaknesses can we together have the confidence to take on projects that take a long time and are high risk. When one of us is being overly pessimistic or optimistic, the other can provide a balanced view.

In the next few sections of the letter, I’ll write about how innovation can help the world make progress on the other causes of childhood deaths.

Vaccines are a miracle because with three doses, mostly given in the first two years of life, you can prevent deadly diseases for an entire lifetime. Because the impact is so incredible, vaccines are the foundation’s biggest area of investment—more than $800 million every year—and the return is substantial. We are working to get other donors to put more resources into vaccines because we still have big challenges. The first challenge is to invent them, and the second is to make sure they reach everyone who needs them. Achieving full coverage is hard in poor countries, where cost and delivery are big barriers.

Various innovations can simplify the delivery. Sometimes it’s possible to combine different vaccines into one. A great example of this is the vaccines for diphtheria, tetanus, and pertussis (whooping cough). They were first introduced in the 1920s. In 1942 they were combined into a single vaccine, called a trivalent vaccine because it has three active elements. The price of all three doses of this vaccine is now less than 50 cents, and over 77 percent of children in the poorest countries of the world get all three of the doses they need to be protected. Since the trivalent vaccine was introduced in developing countries, tetanus deaths are down nearly 88 percent and pertussis deaths are down 70 percent. Almost all deaths from the three diseases would be stopped altogether if vaccine coverage were improved to 95 percent everywhere.

Even when a vaccine can’t be combined with others, you can still improve distribution by making it free for poor countries, or cheap enough that they can afford to buy it. This has been a key focus for the GAVI Alliance, which we helped create almost 10 years ago. GAVI gives grants to poor countries to improve vaccine coverage and to help pay for new vaccines. GAVI has worked to get two new vaccines into widespread use since it was started.One prevents hepatitis B, an infection that eventually causes liver cancer in adults and kills over 600,000 people per year. The other prevents HiB (or Haemophilus influenzae type B), a type of bacteria that causes meningitis and other life-threatening problems during childhood. By the end of 2008, 192 million children had received the hepatitis B vaccine and 41.8 million children were protected against HiB.

Now the hepatitis B and HiB vaccines have been combined with the trivalent vaccine to create a vaccine with five active elements—a pentavalent vaccine. GAVI’s work in helping to provide both the stand-alone and pentavalent vaccines has raised hepatitis B coverage to 68 percent of newborns and HiB coverage to 24 percent of newborns in the poorest countries.

Cost is still a problem. Today a full set of doses of the pentavalent vaccine costs over $8 more than the trivalent vaccine. But as manufacturers produce more vaccine and additional competitors come into the market, the cost premium should drop by half in the years ahead. This is why the global health community has a goal of raising coverage of HiB vaccine to over 80 percent by 2015, which could then save 250,000 lives per year in the poorest countries in addition to eliminating lots of suffering and disability.

With the progress on these vaccines, GAVI will add a focus on two vaccines that are already being used in rich countries: one for rotavirus, which causes diarrhea, and another for pneumococcus, which causes pneumonia. You can see in the childhood death chart what a large impact these new vaccines can have if widely used. Rotavirus vaccine could save 225,000 to 325,000 lives per year, and pneumococcal vaccine could save 265,000 to 400,000 lives per year.

In last year’s letter, I said that I thought we could get the rotavirus vaccine out to over half of the kids who need it within six years. I still think we can achieve this in the five years we have left, but it is going to be a lot harder than I expected. Many countries have not added a new vaccine for over 20 years. Incredibly, some countries don’t even have a process for deciding whether to add a new vaccine. In others, the process is still there on paper, but no one remembers who is supposed to do what. We avoided this problem with HiB and hepatitis B by creating the pentavalent vaccine, but it won’t be possible to combine rotavirus and pneumococcus with other vaccines. In addition,countries understandably hesitate to add an expensive new vaccine until they have specific proof of the disease burden in their country. Sometimes they accept data from similar countries, but sometimes they don’t.

This year the foundation helped launch a new approach to encourage a high-volume, low-cost supply of a pneumococcus vaccine that meets the needs of poor countries. This approach is called an Advance Market Commitment, and it involves a group of donors pledging $1.5 billion to help pay for the vaccine for poor countries. We expect that manufacturers will commit to building factories much earlier than they would otherwise in order to compete for this money. During 2010 the negotiations with manufacturers should come to a conclusion. We believe this will make a big difference in how quickly this vaccine gets to poor children and show how this approach can be applied to other medicines.

Two years ago, Melinda and I challenged the health field to set a goal of eventually eradicating malaria. Because it is such a widespread disease, the foundation has backed a number of different types of innovations. In 2005 we helped fund a medium-risk pilot project in Zambia to test having most people in an area sleep under insecticide-treated bed nets and spray the inside of their house with insecticides. These interventions have proven to reduce malaria substantially, and other partners have now taken the lead on the large-scale delivery of these interventions. There has been a dramatic increase in bed net usage thanks to donations from individuals (some through church organizations and Nothing But Nets), The Global Fund, and rich governments. The countries that have had these interventions in wide-scale use for several years are seeing large reductions in malaria deaths: Rwanda has seen a 45 percent decline, Zambia 50 percent, Cambodia 50 percent, Eritrea 80 percent. These interventions are being scaled up rapidly, which will have a big impact.

But malaria is a particularly tricky disease. The current tools alone will not be enough to eradicate it, so we are funding new medium- and high-risk innovations. For example, we are funding the invention of new insecticides for use on bed nets, because some mosquitoes are developing resistance to the current one. And because bed nets aren’t accepted in some locations, we are also investing in new ways of delivering insecticide in a house—perhaps using candles or chemical sticks. We are also investing in cheaper ways to make the drugs we already have, as well as new drugs because we know the parasite will develop resistance to the current treatments.

Finally, to eradicate the disease, we will almost certainly need a malaria vaccine, which is the highest-risk malaria work we fund. The key here is that researchers are pursuing a lot of different ideas, so that if one fails, there are still several other options. One partially effective vaccine candidate, known as RTS,S, has started its Phase III trial, which is an important step.Other vaccine approaches are at an earlier stage and they also look very promising.Scientists are combining some of these other vaccine efforts with RTS,S to raise its effectiveness and duration, an approach that could lead to a highly efficacious vaccine in 8 to 15 years.

Polio is down to fewer than 3,000 cases a year—a 99 percent reduction in 20 years—but getting rid of the last 1 percent is the hardest part of eradicating a disease. When we increased our investment in polio two years ago, we viewed it as a challenging delivery problem rather than something requiring a new tool, because the oral vaccine worked quite well. Most of our funding has supported innovative approaches to delivery. But when we saw that in some places the oral vaccine wasn’t totally effective, we also funded the creation of new forms of the vaccine,which are targeted at subsets of the three different varieties of polio virus. This is a good example of needing to stay open-minded about the best approach to solving a problem, because the new forms of the vaccine have been critical in the progress that has been made this year.

In last year’s letter I mentioned that there are four countries that account for most of the remaining cases. One was Nigeria, particularly in its northern states, where polio has been especially problematic. In 2009, thanks to new money and political support from some state, local, and traditional leaders, they were able to vaccinate more children in most states. This led to a 50 percent decline in the overall number of cases and a 90 percent decline in the most virulent strain. In 2010, they will need to get the vaccination rate up in every state.

The three other countries—India, Afghanistan, and Pakistan—shrunk the geographical areas affected by the virus. Some of the toughest remaining areas are the ones where the security situation is bad, like parts of Afghanistan and Pakistan.

When outbreaks did occur, countries responded faster and more effectively than they had before. Last year, polio virus from Nigeria and India spread to more than 15 African countries that had been considered polio-free. But because many countries had begun using better laboratory techniques, they identified the virus quickly and started immunization campaigns right away, which limited the spread of the outbreak. Still, we haven’t gotten these countries back to zero cases yet, especially in west Africa and Chad, where the outbreak is still widespread. I will be traveling to some of these countries to meet with health leaders, and I expect I’ll be able to report even more progress in next year’s letter.

There is some encouraging news here. HIV isn’t spreading as fast as it was. The number of new people getting infected with the virus peaked in 1996 at 3.5 million and was down to 2.7 million in 2008. Prevention efforts, like the foundation’s work in India to get sex workers and their clients to use condoms more often, are part of the reason for this reduction. But 2.7 million is still 2.7 million too many, and in some places, the disease rate is still incredibly high. In South Africa, 18 percent of adults are infected, and in parts of the country more than half of the women are infected by the time they are in their mid-20s.

The number of people worldwide receiving antiretroviral (ARV) therapy for HIV increased to 4 million last year, which is a great achievement. In the early years of AIDS, it was not clear whether a large-scale treatment effort would work in Africa. Beginning in 2001, the foundation helped fund treatment in Botswana, one of several projects showing that it could work. The Global Fund and the United States’ PEPFAR program (a $50 billion program to help combat AIDS in Africa) have since taken the lead in scaling up ARV delivery. They are both doing a great job, although there is a lot of concern that limited funding will restrict the number of new patients they can treat.

Treatment is important, but we urgently need innovations to prevent the spread of HIV, which is where the foundation has focused a lot of its efforts. Trials are in progress on pills and gels that we hope will substantially reduce the chance of getting infected. We will begin to see the results from these trials late this year.

Another approach to reduce the spread of HIV is male circumcision. I mentioned in last year’s letter that studies have shown that male circumcision reduces the odds of transmission from a woman to a man by over 60 percent. In areas where transmission is widespread, if you circumcise most of the men over 14 years old you can significantly reduce the spread of HIV. The foundation funded pilot efforts to scale up circumcision, but I viewed it as high-risk because I was doubtful that enough men would volunteer to be circumcised. That is why last December I went to visit Bertran Auvert, a French scientist working in a South African township called Orange Farm. Bertran conducted one of the key studies on the effectiveness of circumcision, and now he has set out to show that doubters like me are wrong.

He and his co-leader, Dirk Taljaard, are modest about their work but, amazingly, they are getting over 750 men a month to come to their facility. They have already circumcised 14,000 men, and within a year they think they will be able to circumcise almost all of the men in the community. It looks like a very high percentage will participate. Bertran’s approach is very efficient, with costs of only $40 for the surgery. Based on this success, a number of facilities are being set up in South Africa and in other countries with high HIV prevalence to do the same thing. In many African countries, if a high percentage of men volunteer for circumcision, it will reduce the number of cases at least 30 percent over time, which shows what an impact a great scientist like Bertran can have.

The major news in AIDS this year, which you may have read about, concerned an HIV vaccine. A trial done in Thailand reported its results in September. The foundation’s biggest spending on AIDS focuses on vaccine work, but we didn’t fund this trial. Although there are several ways of analyzing the data and the vaccine had only modest effects, the results of the trial were good news. They showed the scientific community that a vaccine is possible.

The AIDS community is working on a number of candidate vaccines, many of which show better results in tests on monkeys than the vaccine used in the Thai trial. Since only a few vaccines can be picked for a trial, the community will have to collaborate and figure out which ones should go forward. Although a vaccine for widespread use is still more than a decade away, the scientific progress this year was better than most people expected.

Measuring Teacher Effectiveness

The foundation works on health in poor countries because we think it’s the best way to improve lives globally. In the United States, we believe the best way to improve lives is to improve public education. America’s education system has been fundamental to its success as a nation. But the way we prepare students has barely changed in 100 years. If we don’t start innovating in education to make it better and more accessible, we won’t fulfill our commitment to equal opportunity, and our competitiveness will fall behind that of other countries.

In last year’s letter I wrote about the evidence that helping teachers teach more effectively is the best way to improve high schools. It is incredible how much the top quartile of teachers can improve the skills of even students who are quite far behind. This was a new effort for us at the time, so in 2009 I spent a lot of time trying to understand more about teaching: How do you identify the best teachers? How can they help other teachers be as good as they are? What investments are made to raise the average quality of teaching?

It is amazing how little feedback teachers get to help them improve, especially when you think about how much feedback their students get. Students regularly have their skills measured with tests. The results show how they compare to other students. Students know how to improve because they see where they did well and where they didn’t. They can talk to other students and learn from those who mastered the material.

Students get more feedback on their work than people in most jobs. One job where the worker is provided almost no feedback is the teacher at the front of the class. In a teacher’s personnel file there is rarely anything specific about where the teacher is strong or weak. Often there is just a checklist of basic things like showing up on time and keeping the classroom clean. In places where there is a rating system at all, 99 percent of teachers are rated satisfactory. Although this personnel system has the benefit of low overhead and predictability, it doesn’t help identify best practices and drive improvement.

The alternative is a system where time and money are invested in evaluation with the goal of helping teachers improve. Making this work requires both resources and trust. A new system needs to be predictable and help teachers identify weaknesses and give them ways to improve, and it should not make capable teachers afraid of capricious results.

A key point of contention about an evaluation system is how much it will identify teachers who are not good and don’t improve.A better system should certainly identify the small minority who don’t belong in teaching, but its key benefit is that it will help most teachers improve.

A new system requires more than just taking the test scores of the students and seeing how they improve after a year with a teacher. It also involves things like feedback from students, parents, and peer teachers and an investment of time in reviewing actual teaching. Tools like video can be used so that a teacher can send peers a video showing him trying to do something hard, like keeping a class focused, and ask for advice. Instead of people coming into the classroom, which is quite invasive, a webcam can be used to gather samples for evaluation.

To help develop an evaluation system to improve teacher effectiveness, in November we committed $335 million to partnerships in Memphis, Tennessee; Hillsborough County, Florida; Pittsburgh; and Los Angeles. The involvement and support of the union representatives in each of these locations was a key part of their selection.

This is an instance where there isn’t a clean separation between the creation of the innovation—ways to evaluate teachers and help them improve—and the delivery of the innovation, which requires teachers to embrace a change to the personnel system. We are working on both at the same time. Teachers will be evaluated and given incentive pay based on excellence. If most of the teachers in these locations like the new approach and they share their positive experience, then these evaluation practices will spread. The goal is for them to become standard practice nationwide. The benefits of this would be unbelievably large, which is why we are pursuing it even though we know there is a high risk that it could fail. Previous efforts along these lines seemed to thrive for a few years, but if the system is not well run or if teachers reject differentiation, it gets shut down.

The filmmaker Davis Guggenheim, who directed An Inconvenient Truth, has a new documentary about American education coming out this year. Waiting for Superman tells the story of several kids trying to get into schools with high-quality teaching—it’s literally a lottery that will decide the fate of these young people. Although I may be biased because I appear in the movie, I think it is fantastic and hope it will galvanize a lot more political will to improve teaching effectiveness.

Online Learning

Melinda and I visited a number of schools in North Carolina during the fall and had a chance to see some amazing principals and teachers. In one inner-city Charlotte school, teachers look at test results each week to understand who is teaching which concepts the best way so they can learn from each other. In Durham, we visited a special high school called the Performance Learning Center, which is for kids who have dropped out of a typical public school but want to get their high school degree. One reason we visited them was to see how they use online learning. There are no lectures, and kids can move ahead at their own pace. A lot of the kids start out making progress more slowly than they would in a traditional class, but with the support of the teachers in the school and as they get used to the online approach, almost all of them move through the courses a lot faster than normal classes would let them. This is very motivational to the kids because they can do more than a year’s worth of schoolwork in a single year.

The foundation has made a few grants to drive online learning, but we are just at the start of this work. So far technology has hardly changed formal education at all. But a lot of people, including me, think this is the next place where the Internet will surprise people in how it can improve things—especially in combination with face-to-face learning. With the escalating costs of education, an advance here would be very timely.

Most of us have had a teacher whose lectures made a subject seem fascinating even though we didn’t expect that it would be. If you are going to take the time to listen to a lecture, you should hear it from the very best. Now that finding and watching videos is a standard part of the Internet experience, we can put great teachers’ lectures online.

A number of universities are already putting lectures online for free. You can find a lot of these courses at sites like www.academicearth.org. I particularly like the physics courses by Walter Lewin and the solid-state chemistry course by Donald Sadoway, both from MIT. When I want to learn a new concept like the Carnot limit on getting usable energy out of heat, I often will watch lectures from different courses to see how it is explained and test my understanding.

But online learning can be more than lectures. Another element involves presenting information in an interactive form, which can be used to find out what a student knows and doesn’t know. This makes it possible to tailor the learning session to the individual student. Think about what happens to students who get into community college but are told to take remedial math because their test scores are below a cutoff level. The students have to spend time on the things they already know and don’t get to focus on the areas they are confused about. They get very little positive reinforcement from sitting in lectures. Most kids who are put into remedial math drop out before they ever get a degree because it is such a discouraging experience for them. On the other hand, the online system can quickly diagnose what the students know, provide positive feedback, and make sure their time is spent really improving the conceptual areas where they are weak.

We need to bring together the video and interactive pieces for K–12 and college courses. We should focus on having at least one great course online for each subject rather than lots of mediocre courses. Once we have this material in place, it can be used in many different ways. A teacher can watch and learn how to make a subject more interesting. A teacher can assign subsets of the material to students who are behind and finding something difficult. A teacher can suggest online material to a student who is ahead and wants to learn more. A teacher can assign an interactive session to diagnose where a student is weak and make sure they get practice on the areas that are difficult for them. Self-motivated students can take entire courses on their own. If they want to prove they learned the material to help qualify for a job, a trusted accreditation service independent from any school should be able to verify their abilities.

There is a lot of online material being developed, but it isn’t organized in a way where it is easy to find the best material that fits what you want to do. If you search online for a video on photosynthesis, you get tens of thousands of results, including a lot of student projects. Which one is best for teaching kids of different ages and different pre-existing knowledge? We need a simple way of taking all of the education pieces and organizing them and then rating them in context.

One step that would help is having course standards that break down all of the various things to be learned into a clear framework and connecting the online material to this framework. Over time I think a large community of contributors and reviewers will develop and allow the online material to be easy to access and a crucial resource for all types of education. There will need to be a number of pilots to see how to take this resource and blend it into the classroom experience. I plan to spend a lot of time on this to see what would help get it to critical mass.

There is a question of how much of the online material will be free and how much will be paid for. Some of the best interactive software for K–8 learning is being done by startups using interactivity in innovative ways. These companies are licensing the software on a per-classroom and/or per-student basis. Ideally we would get market forces and nonprofit work to complement each other, but given that schools budget very little for software, it isn’t clear whether the marketplace will be large enough for the for-profit model to make a large contribution.

Agricultural Productivity, Including Breeding New Seeds

In the past few years, the foundation has begun to invest heavily in innovations that can increase agricultural productivity for the world’s poor. More than 1 billion people suffer from chronic hunger, and most of them are small farmers. We need to raise their productivity so that they have extra output, which can be saved for lean years, or sold so they can have money to send their kids to school. We will also need to feed the additional 3 billion people that will populate the earth in the next 50 years. People involved in agriculture care about both improving farm productivity and making sure farming is done in a sustainable way. Although these needs are often seen as mutually exclusive, they are actually quite complementary. They both depend on innovation, including new seeds, better training for farmers, and better access to inputs and markets. Some of the recent successful innovations in agriculture are documented in a book called Millions Fed, which you can download at www.ifpri.org/publication/millions-fed.

To make better seeds, scientists find two seeds, each with attractive characteristics—like being adapted to a local environment or having better productivity or disease resistance—and make one seed that combines the good traits. Breeding to get better seeds has been going on for thousands of years. When you see the original teosinte corn plant that is the father of today’s corn, it is hard to believe the two are related. But the change is due entirely to breeding controlled by humans.

There are three things that modern agrotechnology brings to this seed improvement process. The first is simply the ability to gather plant samples from all over the world and use databases to keep track of thousands of plants grown under different conditions. This has accelerated the progress in conventional breeding. The second is the ability to genetically sequence plants, just like we do with humans.We have some understanding of which parts of the genes control which characteristics, so when we cross two seeds we can look at the gene sequence of the resulting seed and know whether it has the characteristics we want. This is called marker-assisted breeding and it dramatically speeds up the cross-breeding process, because researchers don’t have to wait for the seed to grow before they know whether they’ve succeeded.

The final technique is transgenics, where instead of just allowing cross-breeding to create the new seed genome, you actually take a gene and insert it.This is the approach that is still controversial for some people. But with the proper safety reviews, this technique can help create disease-resistant and drought-tolerant crops that could not be created any other way, protecting billions of dollars of harvest and increasing the food supply by millions of tons each year.

These modern techniques have been applied most aggressively to the big cash crops in rich countries. Just like in health, there isn’t a lot of market incentive to use the latest science for the needs of the poor. The foundation’s approach is to fund projects focused on the specific growing conditions in developing countries and the crops that are grown by poor farmers. Most of our grants involve marker-assisted breeding, but a few involve transgenics.

In December I visited the BECA Laboratory in Nairobi, Kenya, which is headed by a scientist named Segenet Kelemu. Their laboratory is doing state-of-the-art marker-assisted breeding to improve sorghum, cassava, and corn so the crops yield more food and resist pests, drought, and diseases. Segenet grew up in Ethiopia, moved away for graduate school, and worked in other countries for 25 years. But she chose to come back to Africa in 2007 to help develop a generation of plant scientists working to end Africa’s food insecurity. I was very impressed with the teams she has put together and the work they are doing with plant breeders throughout Africa. For products like sorghum, even when they can tell that a seed has all the right characteristics, they still have to develop varieties that also match local tastes, since unlike corn or wheat in rich countries there isn’t one standard form that everyone prefers.

Improvements in agriculture and health have relied heavily on the generosity of rich countries. But this generosity represents a much smaller portion of foreign aid than many people realize. Aid for health rose from $5.6 billion in 1990 to $21.8 billion in 2007, which was less than 14 percent of all foreign aid from rich countries that year. This money was incredibly well spent—saving a life for far less than a tenth of what is spent to save a life in rich countries.

Foreign Aid to Poor Countries

In total, foreign aid from the richest countries in 2008 was $121 billion. Specific data is available at stats.oecd.org/qwids, and it’s something I watch closely because the generosity of these governments is key to long-term success.

Because of budget deficits, there is significant risk that aid budgets will either be cut or not increase much. In the table below, I show some countries’ budget deficits as a percentage of gross domestic product (or GDP, a measure of the overall size of the economy). Many of these percentages represent unprecedented peacetime deficits.

The public may not prioritize keeping foreign aid at high levels because so many of them have not heard how effective it is. Some formed their image of foreign aid during the Cold War, when money was sent to buy the allegiance of a dictator with very little control to make sure it was well spent. We need to get the successes to be far more visible than they are today. The organization ONE is a key partner in helping with this, and they have Bono’s brilliance as well as a strong staff. In October Melinda and I did a presentation we called “LIVING PROOF: Why We Are Impatient Optimists” to show how well government investments in health are working. You can watch it at www.livingproofproject.org. This version was focused on U.S. giving, but the message is even more appropriate for the rich countries that are even more generous than the United States.

The best way to measure aid generosity is to look at it as a percentage of GDP. The most generous countries—Denmark, the Netherlands, Norway, Sweden, and Luxembourg—give 0.72 to 1 percent of GDP to foreign aid, which is phenomenal. Most other European donors give between 0.3 and 0.5 percent, and a majority have committed to get to 0.51 percent by 2010. France has traditionally been the strongest giver of this group, but in the mid-2000s their aid actually decreased a bit. Germany, Spain, and the United Kingdom have all made significant increases over the last few years and are now close to or ahead of France. Italy was at the low end of European givers even before the Berlusconi government came in and cut the aid by over half, making them uniquely stingy among European donors. These cuts will show up in Italy’s 2009 aid figures. Bob Geldof put it well when he said the Italian government is suggesting “they want to balance their budget on the backs of the poor—how shameful.” In June, I met with Prime Minister Berlusconi personally to make the case for more support, but I was unsuccessful. This is a huge disappointment since I still think the Italian public wants to be as generous as people in other countries.

Canada and Australia are significant givers, at about 0.32 and 0.29 percent, respectively. Japan used to be a generous giver and has made some strong promises, but they are down at 0.20 percent. Unless the new government changes things for the better, they will fall short of their commitments.

There has been an effort to get Russia, China, and the rich oil countries to do substantial giving, but so far the numbers have been modest. South Korea, however, has become a significant giver, providing over $800 million last year, which is 0.09 percent of its GDP, with a commitment to increase to 0.25 percent by 2015.

The United States is the biggest giver in absolute terms, but in percentage terms gives only 0.19 percent. In recent years, a significant portion of this assistance went to reconstruction in Iraq, Afghanistan, and Pakistan. If Congress passes President Obama’s proposal to double giving, however, the United States will get up into a very respectable range.

Deficits are not the only reason that aid budgets might change.Governments will also be increasing the money they spend to help reduce global warming. The final communiqué of the Copenhagen Summit, held last December, talks about mobilizing $10 billion per year in the next three years and $100 billion per year by 2020 for developing countries, which is over three quarters of all foreign aid now given by the richest countries.

I am concerned that some of this money will come from reducing other categories of foreign aid, especially health. If just 1 percent of the $100 billion goal came from vaccine funding, then 700,000 more children could die from preventable diseases. In the long run, not spending on health is a bad deal for the environment because improvements in health, including voluntary family planning, lead people to have smaller families, which in turn reduces the strain on the environment.

Global Warming and Zero-emissions Electricity

There are a lot of important topics I didn’t get around to in this letter. One area that I have been spending a lot of personal time on is energy and its effect on climate. The most important innovation required to avoid climate change will be a way of producing electricity that is cheaper than coal and that emits no greenhouse gases. There will be a huge market for this, and governments should supply large amounts of funding for basic R&D. Because the foundation invests in areas where there is not a big market, I have not yet seen a way that we can play a unique role here, but I am investing in several ideas outside the foundation. I am surprised that the climate debate hasn’t focused more on encouraging R&D since it is critical to getting to zero emissions. Still, I think it is likely that out of the many possible approaches, at least one scalable innovation will emerge in the next 20 years and be installed widely in the 20 years after that.

Conclusion

I have decided to take the notes I make after taking a trip, reading a book, or meeting with someone interesting and pull them together on a web site called www.gatesnotes.com. This will let me share thoughts on foundation-related topics and other areas on a regular basis. I expect to write about tuberculosis, U.S. state budgets, creative capitalism, and philanthropy in Asia, among other things. The trips I will document will include Nigeria, to check on the status of polio eradication; northern India, to understand more about improving vaccine coverage; and school visits in the United States. The site will complement my annual letters as well as the foundation’s web site, www.gatesfoundation.org, which has a lot more information about the topics in this letter.

My job is fun and interesting because of the great people I get to work with. Besides Melinda this includes our other co-chair—my dad. He is a tireless champion of making sure we keep listening to the people we want to serve and not letting our size get in the way of that. Jeff Raikes, CEO of the foundation, is doing an excellent job evolving how we run, making sure we hire great people, and creating an environment where they can do their best work. And I am always impressed with the dedication and in-depth knowledge of the foundation team, starting with the division presidents—Tachi Yamada, Sylvia Burwell, and Allan Golston. I feel very lucky to get to work with all of them.

...Nine years ago, the foundation decided to invest in helping to create better high schools, and we have made over $2 billion in grants. The goal was to give schools extra money for a period of time to make changes in the way they were organized (including reducing their size), in how the teachers worked, and in the curriculum. The hope was that after a few years they would operate at the same cost per student as before, but they would have become much more effective.

Many of the small schools that we invested in did not improve students’ achievement in any significant way. These tended to be the schools that did not take radical steps to change the culture, such as allowing the principal to pick the team of teachers or change the curriculum. We had less success trying to change an existing school than helping to create a new school.

Even so, many schools had higher attendance and graduation rates than their peers. While we were pleased with these improvements, we are trying to raise college-ready graduation rates, and in most cases, we fell short.

But a few of the schools that we funded achieved something amazing. They replaced schools with low expectations and low results with ones that have high expectations and high results. These schools are not selective in whom they admit, and they are overwhelmingly serving kids in poor areas, most of whose parents did not go to college. Almost all of these schools are charter schools that have significantly longer school days than other schools.

I have had a chance to spend time at a number of these schools, including High Tech High in San Diego and the Knowledge Is Power Program, or “KIPP,” in Houston. There is a wonderful new book out about KIPP called Work Hard. Be Nice., by the education reporter Jay Mathews. It’s an inspiring look at how KIPP has accomplished these amazing results and the barriers they faced.

It is invigorating and inspirational to meet with the students and teachers in these schools and hear about their aspirations. They talk about how the schools they were in before did not challenge them and how their new school engages all of their abilities. These schools aim to have all of their kids enter four-year colleges, and many of them achieve that goal with 90 percent to 100 percent of their students. Every visit energizes me to work to get most high schools to be like this.

These successes and failures have underscored the need to aim high and embrace change in America’s schools. Our goal as a nation should be to ensure that 80 percent of our students graduate from high school fully ready to attend college by 2025. This goal will probably be more difficult to achieve than anything else the foundation works on, because change comes so slowly and is so hard to measure. Unlike scientists developing a vaccine, it is hard to test with scientific certainty what works in schools. If one school’s students do better than another school’s, how do you determine the exact cause? But the difficulty of the problem does not make it any less important to solve. And as the successes show, some schools are making real progress.

Based on what the foundation has learned so far, we have refined our strategy. We will continue to invest in replicating the school models that worked the best. Almost all of these schools are charter schools. Many states have limits on charter schools, including giving them less funding than other schools. Educational innovation and overall improvement will go a lot faster if the charter school limits and funding rules are changed.

One of the key things these schools have done is help their teachers be more effective in the classroom. It is amazing how big a difference a great teacher makes versus an ineffective one. Research shows that there is only half as much variation in student achievement between schools as there is among classrooms in the same school. If you want your child to get the best education possible, it is actually more important to get him assigned to a great teacher than to a great school.

Whenever I talk to teachers, it is clear that they want to be great, but they need better tools so they can measure their progress and keep improving. So our new strategy focuses on learning why some teachers are so much more effective than others and how best practices can be spread throughout the education system so that the average quality goes up. We will work with some of the best teachers to put their lectures online as a model for other teachers and as a resource for students.

Focus on Community Colleges

Finally, our foundation has learned that graduating from high school is not enough anymore. To earn enough to raise a family, you need some kind of college degree, whether it’s a certificate or an associate’s degree or a bachelor’s degree. So last year we started making grants to help more students graduate from college.Our focus will be on helping improve community colleges and reducing the number of kids who start community college but don’t finish.

Designing New Drugs and Vaccines for the Poor

The foundation’s aggressive goals for our health and development work are only realistic because of the basic scientific advances that have been made recently and continue to be made. Investments in research and development by large governments and private companies drive this rapid increase in understanding of medicine and agriculture. The U.S. National Institutes of Health spend about $30 billion per year on biological research. American pharmaceutical, biotech, and crop science companies spend an additional $60 billion. Genome sequencing is a great example of how research by the private and public sectors can benefit the very poor. Scientists, including many funded by the foundation, are using the data from genomic sequencing to design new drugs and vaccines.Our role as a foundation is to help make sure the new science is applied to the needs of the poor, because the marketplace doesn’t respond when buyers have almost no money.

Administrating polio vaccine, Hanoi, VietnamPolio is another good example of what can happen when you take innovations that benefit the rich world and apply them in the poor world. The book Polio: An American Story, by David Oshinsky, tells the story of how Franklin Delano Roosevelt’s polio raised public awareness of the disease and made it possible to raise money for research into a vaccine. The vaccine work was done in the United States in the 1950s, supported by the March of Dimes. Polio was eliminated from the United States in 1979.

Because of that success, in 1988 the world adopted a goal of making polio the second disease to be eliminated, after smallpox. The United Nations Fund for Children and the World Health Organization led the charge. Rotary International has been a primary supporter of the work, and we wouldn’t be anywhere on this without their efforts.

Many people probably think polio has already been eradicated, because it gets so little press coverage, especially in rich countries. But there is still a significant amount of polio in four countries, with most of the cases coming from India and Nigeria. Eliminating it will require continued investment. Many people had hoped that it would be eradicated by now, but it has proven more difficult than expected. Researchers have learned that in some parts of India kids need to receive more than eight doses of the vaccine before they are protected. The government of India has done a very good job distributing it, but with the limited power of the vaccine they will have to add some new tactics and keep up the effort for several more years. Given all of their health priorities this is not easy. I met with the Indian prime minister and health minister this past November and feel sure they will do their part.

The most difficult place to achieve success will be northern Nigeria, where the vaccine is still not being given to enough children.In order to convince enough families to participate in the polio campaign, you need not only dedicated teams that track down all the children but also a clear message from political, tribal, and religious leaders that the vaccine is safe and should be taken. An intense effort is being applied to get all these factors to come together in northern Nigeria. I’m making a visit there next month. With a few more years of investment and hard work the world will have a success with polio, which will invigorate the whole field of global health.

Polio is a good example of why the foundation needs to be flexible in our strategies and budgets. Last year, Melinda and I met with our polio team to get an update on progress against the disease. The team was asking us to approve the same amount of money we had been spending for years, but they kept talking about the many challenges of eradicating polio. Melinda and I probed to understand if they were saying that the world needed to spend more, and whether our leading by example could help make it happen. They said yes, and within a month they had put together a more aggressive plan that involved us spending hundreds of millions more and getting other donors to step up as well. We approved the plan. Rotary International and other donors are doing a great job so far coming up with the extra resources that are needed. Just this month I went to a Rotary meeting and helped announce more than $600 million in new money from various sources that will go toward eradicating polio. But none of this would have been possible if we didn’t keep flexibility in our budget and stay open to changing our approach.

On the AIDS front, you have probably read articles talking about failed trials of vaccines and microbicides. (A microbicide is a gel that a woman can use to protect herself from getting infected.) Although these results are setbacks, in each case we are learning and moving ahead with improved approaches. I am quite hopeful that in the next four to six years we will have either a pill or a microbicide that people can use to protect themselves temporarily from getting HIV.When used on a large scale they will dramatically reduce the annual rate of infection, which is currently 2.7 million. I feel a huge sense of urgency to make sure a pill or microbicide is developed as soon as possible. There are some great scientists working on this, and I am spending lots of time asking them what the bottlenecks are and understanding how we can make faster progress. The intensity reminds me of my time at Microsoft, when we were competing with other companies to make the best database or word processor. However, in this case the competitor is a virus and all of humanity is on the same team, wanting to work together to defeat the virus.

When we get a vaccine it will be even more impactful than a pill or a microbicide, because a vaccine will protect people for much longer. But given the complexities involved, even with the great work being done, it is very likely to be more than 10 years before we have one in widespread use.

To stay alive, people with HIV need to start using anti-retroviral drugs before their immune systems become weakened, usually within five years of becoming infected. In 2003, only 400,000 people were being treated, and now some 3 million are. That is a phenomenal increase. The biggest reason for it is that the United States funded the President’s Emergency Plan for AIDS Relief and managed the effort very well. In addition the United States, along with a number of other countries, has funded the Global Fund for AIDS, Tuberculosis, and Malaria. This is a good example of how scientific innovations, in this case the invention of anti-retroviral drugs, can reach the poorest with help from governments, foundations, and drug companies. Although less than 5 percent of people with HIV/AIDS live in rich countries, it was the market demand from these wealthier patients that drove the large R&D investment in these drugs.

Malaria kills nearly 1 million children per year, but companies and governments have invested very little in new drugs and vaccines because the disease has been eliminated from rich countries. Malaria has a fascinating history. Several Nobel prizes were given to scientists who helped us understand key facts about it—in 1902, 1907, 1927, and 1948. Malaria used to be a serious problem in large parts of the United States, but it was eliminated here by 1951 by large-scale campaigns to kill the mosquitoes that transmit the disease.

Fortunately, the past five years have seen a huge increase in the level of interest and investment in malaria. The foundation can probably take some credit for the increased level of interest in global health in general and malaria in particular. Bono also deserves a lot of credit for his work through ONE. I remember talking with him in 2004 about whether we could ever hope to have candidates discussing these issues during a political campaign. So during the recent U.S. presidential campaign it was fantastic that both Barack Obama and John McCain spoke out on how they would increase funding for global health, including specific commitments on malaria. It is also very exciting that donations from individuals to buy life-saving bed nets have soared.

Malaria is a very tricky disease. The world hoped in the 1950s and 1960s that it could be eliminated by killing mosquitoes with DDT, but that tactic failed when the mosquitoes evolved to be resistant to the chemical. Today a number of new tools are being developed—better bed nets, better drugs, better insecticides, and a number of vaccine candidates.One of the vaccines will go into the last phase of human trials this year and could be ready for wide use by 2014.None of these tools is perfect. To understand how we should combine them, we brought in an expert in mathematical modeling who is applying a technique called Monte Carlo Simulations. This modeling work, which will show where we can eliminate malaria and where we can just reduce the disease burden, is a wonderful use of advanced mathematics to save lives, and if it goes as well as I expect, we will apply it to other diseases. The malaria community has a goal to reduce deaths by over half by 2015, which is aggressive, but it is in line with the results in communities where bed nets and other tools have been rolled out.

Conclusion

A key question for Melinda and me is, Where are foundations uniquely suited to causing positive change? Foundations are not needed in areas where capitalistic market signals work well and the poorest aren’t left out. If someone told you there was a foundation looking into what kind of restaurants should be started and helping them get started, you would rightly wonder why nonprofit dollars were being spent in that way. Foundations provide something unique when they work on behalf of the poor, who have no market power, or when they work in areas like health or education, where the market doesn’t naturally work toward the right goals and where the innovation requires long-term investments. These investments are high-risk and high-reward. But the reward isn’t measured by financial gain, it’s measured by the number of lives saved or people lifted out of poverty.

Foundations are unusual because they don’t have to worry about being voted out at the next election or board meeting.But I do not hold them out as a panacea. Another way that running a foundation is not like running a business is that you don’t have customers who beat you up when you get things wrong or competitors who work to take those customers away from you. You don’t have a stock price that goes up and down to tell you how you’re doing. This lack of a natural feedback loop means that we as a foundation have to be even more careful in picking our goals and being honest with ourselves when we are not achieving them.

We work hard to get lots of feedback. Each of our three divisions has gotten great people to participate in an advisory panel that reviews their strategies. In addition, every significant grant is reviewed by a number of outside experts. And as we execute our strategies, we need to share what we learn, because the biggest leverage is in getting many others to adopt best practices. Since we are in this for the long run, we need to develop credibility by the strength of our evidence, and by not claiming to know more than we do.

Every year, Melinda and I want to make sure we are taking a hard look at where the foundation should get involved and where it should stay out.In the areas we work in, we want to make sure the foundation is drawing in other players in the best way we can. Given the business sector’s broad expertise and resources, we particularly need to get more of its innovation power focused on our issues. I have spoken a lot in the past year about “creative capitalism,” which outlines the incentives and benefits to make this happen. Next year I hope to have some examples of how this has made a difference.

The financial market and economic conditions that have developed this past year are truly unprecedented. I hope two years from now when I write this letter I can look at this section as a reflection of something that was short-term and that has passed, but I think the effects of the crisis will last beyond that.

Warren recently sent me an excerpt from John Maynard Keynes’ essay “The Great Slump of 1930,” which applies to this crisis as well:

"This is a nightmare, which will pass away with the morning. For the resources of nature and men’s devices are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life—high, I mean, compared with, say, twenty years ago—and will soon learn to afford a standard higher still. We were not previously deceived. But today we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time—perhaps for a long time."

If you take a longer timeframe, such as five to 10 years, I am very optimistic that these problems will be behind us. A key reason for this is that innovation in every field—from software and materials science to genetics and energy generation—is moving forward at a pace that can bring real progress in solving big problems. These innovations will help improve the world and reinvigorate the world economy.

Looking specifically at the foundation, our assets decreased in value by about 20 percent in 2008. I never thought I would say losing 20 percent is a reasonable result, but it is better than most endowments because so many asset classes went down by more than 20 percent in 2008. The team led by Michael Larson that handles the investments has always done a great job. During the past five years, as the foundation was growing, we spent a bit over 5 percent of its assets each year in addition to the gift from Warren. There is nothing magic about the 5 percent figure, except that it is the minimum required by the IRS. Our spending in 2008 was $3.3 billion. In 2009, instead of reducing this amount, we are choosing to increase it to $3.8 billion, which is about 7 percent of our assets.

Although spending at this level will reduce the assets more quickly, the goal of our foundation is to make investments whose payback to society is very high rather than to pay out the minimum to make the endowment last as long as possible.

The global recession and market turmoil are forcing everyone to take a hard look at their plans. Businesses and consumers are cutting back on spending. The 50-year-long credit expansion that fueled high spending levels, particularly in the United States, has turned into a credit contraction. Governments face revenue shortfalls at the same time their citizens need government services more than ever. A great example of this is education. Recent improvements taking place in K-12 education could be reversed because of budget cuts. State-funded two-year and four-year colleges will see record demand but may also face spending cuts. As governments respond to the crisis, they need to protect these investments even as they spend to stimulate the economy. In the United States only the federal government can do deficit spending and increase its investment in long-term goals like education. I am impressed with the way President Obama has talked about the need to do both and has his team looking at investments that fulfill both goals.

Like education funding, I see foreign aid that is spent wisely as being a smart thing even during these tough times. I hope the United States and other rich countries will continue to increase their aid, and when I meet with political leaders I encourage them to do so. The British prime ministers Tony Blair and Gordon Brown have been great about this. The most generous aid givers in proportion to the size of their economy are Norway, Sweden, Denmark, and the Netherlands. By this measure the big European countries are quite a bit more generous than the United States. Most of those that were not already large donors have increased significantly since the European Union and G-8 made new commitments in 2005. The current Italian government stands out because it is not only falling short on the increases but is actually cutting its aid budget. I don’t think this is because Italians care less about the issues, so I’m hopeful the government will find a way to restore this funding as part of its policy proposals when it hosts a G-8 summit this year.

Although it will be difficult to keep aid-related issues on the front page during this crisis, we need to meet the challenge by making sure the success stories are told and making sure that inequity that is out of sight is not out of mind. Only with broad public awareness and voter interest will we keep aid on the positive track it needs to stay on.

I am impressed by individuals who continue to give generously even in these difficult times. I believe that the wealthy have a responsibility to invest in addressing inequity. This is especially true when the constraints on others are so great. Otherwise, we will come out of the economic downturn in a world that is even more unequal, with greater inequities in health and education, and fewer opportunities for people to improve their lives. There is no reason to accept that, when we know how to make huge gains over the long term.

The commitment that Melinda and I have made to this work is not dependent on it being easy or short-term. We can make this commitment because of the amazing people we meet whenever we travel for the foundation. I want to close this letter with a story about one person we met when we visited some schools in Texas last year. At Lee High School in Houston, we met a principal named Cesar Alvarez. Cesar told us about a student who had come to school as a freshman three years before and was in a gang. He was far behind in school, and he wouldn’t even talk in class. Cesar got very involved with this student and worked with him every day. Today the student is a senior, on course to graduate, and planning to go to college. When Cesar came to this part of the story, he broke down and cried, because he had worked so hard and practically worn himself out for that student.

Melinda and I see this kind of dedication around the world and in every issue the foundation works on. It inspires us to help people do great work, and we feel very lucky to be able to support them. I know the foundation will have its share of setbacks. But I feel sure I will have lots of success stories to share in the years ahead.

HERE'S ONE FOR THE PHOTO ALBUM: Obama seems extremely pleased to be photographed surrounded by socialists, communists and terrorists... so much so, he gave the "thumbs up." Communist Obama and communist Russian President, Dmitri Medvedev, celebrate after agreeing on how to transform the world into a one big socialist planet via G20 financial reforms. Hugging them both is cocialist Italian Prime Minister Silvio Berlusconi, who has an extensive record of criminal allegations, including mafia collusion, false accounting, tax fraud, corruption and bribery of police officers and judges. Summit host and socialist UK Prime Minister, Gordon Brown, said the deal heralded a “New World Order."

Glenn Beck exposes Obama making a run for a New World Order, global government, and then exposes eco-crooks: Obama, Al Gore, Goldman Sachs, and others, who stand to make huge fortunes if Cap & Trade is passed. Shows Fannie Mae and Freddie Mac were involved. It's all part of George Soros' for One World Socialism. 04.26.10

Frightening and Damning Movie: Invisible Empire - A New World Order Defined. We cannot speak to the assertions made in the movie associated with JFK, MLK, Princess Diana, OK Bombing, 9/11 and all portions beginning at and following the Bohemian Grove segment. However, the balance of the film we have independently verified from multiple sources. You'll find Ted Turner's and George Bush, Sr's words in this movie particularly disturbing. 04.15.10

Power to the People! Saudi Arabian Prince Ahwaleed bin Talal is 2nd largest stock owner of Fox News parent company, Rupert Murdoch’s, News Corp. New World Order = One World Government 02.18.10
Henry Kissinger's Relationship to "New World Order", Obama and Tim Geithner (Whose First Job was with Kissinger Associates): 1, 2, 3, 4, 5, 6, 7, 8, 9 01.11.10

Zbigniew Brzezinski's Relationship to Obama and "New World Order": 1, 2, 3, 4, 5,6, 7, 8 01.11.10WATCH THIS: Communist "New World Order" Video Statements from Obama, George Soros, EU's president, the Clintons, Kissinger and wide variety of [globalist] world leaders and members of the Bilderberg Group. A super rich banker cartel is about to take over the entire world's financial system. That's when the fascism commences. 01.02.10

Featured Movie: The Obama Deception (HQ Full Length). It's Core Assertion: banks, Wall Street and the super rich pick presidents and have been working on a US and world takeover for decades and that the takeover will occur within 10 Years. Obama is mere puppet. 03.12.09

Retired US Army General Wesley Clark, Former NATO Supreme Allied Commander Europe, is now working directly with socialist George Soros, whose stated goal is to defeat capitalism and make America a socialist country. See article below:

International Crisis Group: George Soros is on the Board along with Council on Foreign Relations Members, Thomas R. Pickering, Morton Abramowitz, Zbigniew Brzezinski, Wesley Clark, James V. Kimsey, George J. Mitchell and Kenneth Adelman and UN Leaders, Kofi Annan, Lakhdar Brahimim, Asma Jahangir and Louise Arbour. These Men are Enemies of America. Wonder What New Financial Crisis They're Planning Next for Us? 04.24.10

Why are 3 George Soros funded/associated organizations (Microsoft, Amnesty International and Goldman Sachs -- the only ones mentioned) all specifically identified in this Council on Foreign Relations (CFR) document, written by the CFR's president? The document describes the US and other countries giving up sovereignty, for example, to cap carbon emissions. The CFR Organization's 4,300 Members include very big names. George Soros has written and/or is mentioned in 379 CFR Documents. "Goldman Sachs" is found in 888 CFR Documents and "Jeffrey Sachs" is found in 319 CFR Documents. "New World Order" is a frequent focus and found in 135 CFR Documents. The Communist code word, "Social Justice" is found in 916 CFR Documents. The Communist code word, "Sustainable Development" is found in 352 CFR Documents. The Communist "Global Warming" Scam is found in 957 CFR Documents. "Socialist" is found in 562 CFR Documents. Example, CFR "must read" (their words, not ours): New World Order Document, says "Copenhagen talks are an indication that a new world order may be forming with increasing power given to China." We suspect most Americans will not like what this powerful "think tank" is thinking. 04.25.10

Soros has millions invested in tech firms: Google, Microsoft, Yahoo and Apple. Do you think Soros is influencing these companies? 02.26.10

The "MS" in MSNBC's, MicroSoft's Bill Gates: Spouting Communist Global Warming Propaganda and Promoting Al Gore. Says CO2 must be brought to Zero (so I guess we can't breathe). Wants to Have the Russians Create Energy using Nuclear Plutonium Fast Reactors. Wants to Cut World Population by 15% through Vaccinations, Healthcare and Reproductive Health Services. After Watching This, Do You Want to Take Bill Gate's (Bilderberg) Vaccine that He's Promoting in Third World Countries? 02.19.10

Soros has millions invested in tech firms: Google, Microsoft, Yahoo and Apple. Do you think Soros is influencing these companies? 02.26.10

Henry Kissinger Talks at Google. Kissinger Mentions His Relationship to the Rockefellers, Says His Greatest Accomplishment was Negotiating War Withdrawal with the Communist North Vietnamese and Describes that He was the Only US Person allowed to Shuttle Between Communist Countries. Google's CEO Eric Schimdt Admits His Father had a Hidden Chairman Mao "Little Red Book". Kissinger was Tim Geithner's First Boss. Kissinger has said Barack Obama would be the Architect of a “New World Order.” 08.19.08

Rich elites of the "Bilderberg Group" plan New World Order and economic depression. Attendees have included Ben Bernake, Tim Geitner, Hillary Clinton, Henry Kissinger, and who's who of the world's most powerful. Here is Obama's Involvement. US government attendance at such secret meetings is illegal and high treason. May 2009

Those of you living in California, you should take a good hard look a Meg Whitman. Her fortune is intertwined with Goldman Sachs. We all need to do our homework!! We cannot afford another big mistake!!

No, we can ill afford to continue to make the mistake of avoiding our American duty to throw off this oppression and to do so in a very well planned, pronounced, and coordinated fashion. When was the last time you heard anyone ask a political candidate, "Are you a member of any organizations supporting globalist, transnationalist, or communitarian ends?"

When have you ever heard candidates asked, "Do you pledge to completely uphold America's individual, state, and national sovereignties, against every internal and external threat, according to our Constitution and our Declaration of Independence?"

Let us go ask them and hold them accountable. It's the American sovereignties, "stupid."

The New World Order Plan is spiritually based: it is a conflict between God and His forces, on the one hand, and Satan and his demonic forces on the other side. Anyone who does not know Biblical doctrine about God and Satan, and who does not know Scriptural prophecy, cannot comprehend the nature of the struggle facing the world today. - David Bay, Cutting Edge Ministries

For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places. - Ephesians 6:12

For we are opposed around the world by a monolithic and ruthless conspiracy that relies on covert means for expanding its sphere of influence... Its preparations are concealed, not published. Its mistakes are buried, not headlined. Its dissenters are silenced, not praised. No expenditure is questioned, no rumor is printed, no secret is revealed. - President John F. Kennedy, April 27, 1961

The Bible

Protocols of the Learned Elders of Zion

The book in which they are embodied was first published in the year 1897 by Philip Stepanov for private circulation among his intimate friends. The first time Nilus published them was in 1901 in a book called The Great Within the Small and reprinted in 1905. A copy of this is in the British Museum bearing the date of its reception, August 10, 1906. All copies that were known to exist in Russia were destroyed in the Kerensky regime, and under his successors the possession of a copy by anyone in Soviet land was a crime sufficient to ensure the owner's of being shot on sight. The fact is in itself sufficient proof of the genuineness of the Protocols. The Jewish journals, of course, say that they are a forgery, leaving it to be understood that Professor Nilus, who embodied them in a work of his own, had concocted them for his own purposes.

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